Key Takeaways
- The Indian rupee is expected to open in the 94.48 to 94.50 range.
- Oil prices are rising, with Brent crude near $97 a barrel.
- The Reserve Bank of India remains active in the market to defend key levels.
The Indian rupee is expected to open little changed on Tuesday, caught between pressure from higher oil prices and dollar demand from companies looking to hedge their foreign exchange exposure, according to traders.
The rupee is expected to open in the 94.48 to 94.50 range, having settled at 94.4850 to the dollar on Monday. This follows a recovery from around 95.70 to 94.50, which has lost momentum due to rising oil prices and renewed importer hedging.
Traders note that importers have used the rupee’s recovery to lock in dollar requirements, while the prospect of costlier crude keeps demand for hedging high. The Reserve Bank of India (RBI) has been active in the market, initially driving the initial rally through persistent dollar sales.
However, its role in recent sessions has shifted toward absorbing pressure from oil and higher US Treasury yields rather than actively pushing the rupee higher. A currency trader at a bank stated, 'The RBI is quite active around the 94.50 level for now.'
Oil prices are on the rise, with Brent crude near $97 a barrel. This is due to escalating US-Iran tensions and threats to Gulf energy infrastructure, which raise the risk of supply disruptions through the Strait of Hormuz. Brent crude had rallied nearly 8% last week, according to Goldman Sachs.
The bank raised its Brent forecasts by $5 a barrel, to $85 for December 2026, and to $80 for 2027, assuming Middle East shipping disruptions persist into next year. Risks to the forecasts remain significantly skewed higher, particularly in the near term, with Brent potentially climbing to $120 in its upside scenario.
The RBI’s continued presence in the market is seen as crucial in defending key levels. A trader noted, 'Oil and importer demand is making it harder to push dollar/rupee lower, and the RBI may be more comfortable defending these levels.'
The RBI is quite active around the 94.50 level for now.
A currency trader at a bank, Currency trader
Oil and importer demand is making it harder to push dollar/rupee lower, and the RBI may be more comfortable defending these levels.
A currency trader at a bank, Currency trader
